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Economist at UOB Group Enrico Tanuwidjaja and Haris Handy reviewed the latest FX reserves figures in Indonesia.

Key Quotes

“Indonesia’s foreign exchange reserves increased by USD 1.2bn to USD 131.7bn in June 2020, almost beating the record-high of USD 132bn in Jan 2018. The latest reserve level was equivalent to 8.4 months of import financing or 8.1 months of imports and payments of government external debt.”

“The increase in June’s foreign exchange reserves was driven by the government’s global Sukuk issuance. Going forward, we might see a further moderate build-up in FX reserves on the back of capital inflows as foreign investors’ confidence in Indonesia’s economy improves. In addition, better market conditions from three months ago also reduce the need for BI to conduct market interventions. Nevertheless, the downside risks remain as Indonesia continue to record new COVID-19 cases coupled with the possibility of 2nd wave of COVID-19 outbreak which may result in capital outflows.”